Mobile phone companies are in talks with the Link network, the body that co-ordinates the cash machine system, to install pre-pay mobile facilities at cashpoints.

Although all sides stressed the talks are at an early stage and that no decisions have been reached thus far, Orange and Vodafone said they were interested 'in principle'.

If an agreement is reached, it is possible that cashpoints which can be used to buy time on mobiles could be up and running within 12 months. But those involved are, for now, remaining tight-lipped.

"Link is in talks with a number of operators, but no deals or contracts are in place," said Victoria Ebdon, spokesperson at Link. "It is therefore too premature to give any comments on the service."

The service would greatly benefit mobile companies, which incur high costs in running the current paper-based pre-pay system. But a revised setup would rely on the installation of new software - something that would undoubtedly be pricey and could end up costing the user more money.

Link would not confirm any plans or charging policies but, if a system concurrent with existing ATM services is adopted, then users could find themselves being charged extra for using other cash dispensers in train stations and petrol stations.

The system is expected to work one of two ways. Customers may register their phone numbers against an existing account and a top-up option would be displayed on the screen, or a random number could be printed out and the customer would type that number into their phone, similar to the existing top-up method.